MONETABRIEF – Any unlicensed online casinos in Sri Lanka whether they are in the Port City or outside are illegal unless they get a license from the newly set up Gambling Regulatory Authority, regulatory officials said.

Criminal casinos targeting mainly East Asian nations where gambling is illegal which were ejected from Philippines and Cambodia have shifted to Sri Lanka and a number are operating out of Port City BPOs.

Central Bank Governor Nandalal Weerasinghe said he was not personally aware of online casinos operating out of Port City but the Gambling Regulatory Authority has blocked some foreign websites.

"Any gambling licenses should come under our regulatory authority, that's my understanding, whether within the Port City or outside the Port City," he said.

Illegal

The GRA was still working on the regulations, he said, referring the matter Sri Lanka's Financial Intelligence Unit, which operates under the central bank.

"To offer any online gambling in Sri Lanka, they need to establish a company in the country, and also they need to obtain a license to offer online gambling to our people," Subhani Keerthiratne, Head of the FIU which is in charge of countering money laundering.

"So the gambling regulatory authorities are in the process of finalizing the regulations, but still, as per the Act, because Section 18 specifically requires anyone to offer online gambling to take a separate license for that. So it's illegal."

The Port City and Board of Investment firms however are not mainly targeting Sri Lanka, though there are advertisements around Colombo.

OPEN SEASON : A billboard advertising an online casino website in a billboard in Sri Lanka's capital. Visitor who visit the website are re-directed to a telegram channel

Some BPOs are providing support for so-called 'white label' gaming software for criminal gaming networks, as well as marketing, customer support, recruitment and training.

Criminal Gaming

Some of the companies that have shifted to Sri Lanka are former Philippine Offshore Gaming Operators (POGOs) which had so-called International Gaming Licenses (IGLs) to operate offshore out Special Economic Zones and also in Manila.

The operations were shut down by current President Ferdinand Marcos junior.

Others have come from Cambodia, as the country also cracked down on online casinos and scam compounds.

Online casinos proliferated in East Asia during Covid as physical travel restrictions.

Criminal casinos and scamming hacking networks were run by the transnational organized crime networks in East Asia, according to the UN Office Drugs and Crimes.

A United Nations by Office report noted that POGO or International Gaming Licenses, were a key loophole for criminal networks to target countries where gambling is illegal.

"POGOs themselves represent a loophole, providing online gaming primarily to gamblers from jurisdictions in which gambling is illegal," a report compiled by the Office of the United Nations High Commissioner for Human Rights said.

The POGOs were shut, following international pressure, their assets seized and online casinos in the Philippines are now only allowed to sell to casinos within the country.

"As per the Act, Gambling Regulatory Authority Act, there is a requirement for anyone to offer any service, like software services, they still need to get a license for that," Keerthiratne said, who serves as an ex-officio member of the Gambling Regulatory Authority.

"So there are requirements, once the Gambling Regulatory Authority is fully operationalized, they will definitely look into this issue."

In the past, BPO/KPO operations in Sri Lanka provided back office servioces, accounting, equity analysis and call centres for ordinary companies running legal businesses.

As a result, there was no additional oversight required for Sri Lanka authorities to waste time to kepp track of who the final clients of BPO firms were.

Harsha de Silva, Chairman of Sri Lanka Parliament's Committee on Public Finance has raised a red flag many months before the extent of illegal online casinos came to light.

Junkets, Exchange Controls and Scamming

Criminal online gaming had mushroomed during the Covid pandemic among casino compounds in East Asian special economic zones that suddenly lost visitors who used to come from countries where gambling was illegal as the pandemic halted travel.

The scam compounds in Esat Asia had originated out of two state controls.

One was the ban on gambling that kept legal, regulated companies out of the business, and the other was exchange controls (capital controls) that resulted from soft-pegged central banks with policy rates.

Some of the casinos compounds in East Asia were run by junket operators from Macau, which were already involved in transferring money for clients from countries with soft-pegged central banks and exchange controls.

"Because of the historically close links between junkets, which served as credit providers for customers seeking to evade capital controls and quotas, and organized crime, which have traditionally provided corresponding debt collection services, these profits supported a range of other criminal enterprises requiring money laundering or money transfer services, as well as seemingly legitimate investments," notes a report by the UN Office for Drugs and Crime on Casinos, Money Laundering and Underground Banking.

The online casinos in loosely regulated special economic zones run by junket operators had then branched out into other cyber frauds including hacking and scamming.

"Unregulated and underregulated online casino platforms run by junket operators, while profitable in and of themselves, also serve as a useful channel of credit settlement between junkets and their clients, and have been observed to be misused extensively to comingle and disguise proceeds of crime as legitimate online gambling profits," the UN report said.

"At the same time, many illegal online casino in Southeast Asia have diversified their business lines into cyber fraud operations, with extensive evidence of infiltration of organized crime within casinos and SEZs for the purposes of concealing various illicit activities.

"Most, if not all, of the largest junket operators have established these operations, with smaller junkets and online platforms acting as customer referral agents where further money laundering and layering can take place.

Sri Lanka has seen a proliferation of scamming and hacking activities in recent year.

The first POGO-style murder and kidnapping has also taken place from the Port City.

Deceptive Recruitment

Criminal syndicates are effectively trafficking young people from East Asia to Sri Lanka under false pretenses with recruiters working for Port City companies misleading them that offshore casinos are legal in Sri Lanka as opposed to Cambodia and the Philippines.

The gambling firms are targeting friendly countries, especially China, Vietnam and a number of East Asian countries.

Recruiters working for TT88, an online casino ring, are now expanding in Sri Lanka and recruiting staff to hit Vietnam offering 1300 dollars a month.

South Asian workers are offered half the pay.

Some companies are also offering payment in crypto according to online recruitment advertisements and a part in rupees.

However, USDT or rupees are not approved currencies for the port city.

Meanwhile Governor Weerasinghe says USDT is not legal to make payments in Sri Lanka.

Enforcement

China and Vietnam are prime friendly countries that are hit by illegal gaming companies, but other countries are also targeted.

Governor Weerasinghe also suggested that like Sri Lanka's Gambling Authority blocking some foreign websites recently, other countries could also do that.

However China has been doing that for years and criminal gaming firms use a large number of mirror sites to dodge internet bans.

Port City BPOs also recruit SEO specialists to boost the rating sof their websites as they play hide and seek with anti-cyber crime police in China, Vietnam and Philippines among others.

As a result they are now requesting authorities in friendly nip criminal activities at their source.

"The position of the Chinese government on cross-border gambling is consistent and unequivocal: Chinese capital is forbidden to invest in overseas casinos, Chinese citizens are forbidden to participate in the operation of overseas casinos, and overseas casinos are prohibited from soliciting Chinese citizens to gamble,"China's embassy in Colombo said in a statement.

"Tens of thousands of Chinese citizens have suffered property losses and even personal harm as a result of cross-border gambling.

"Such activities may also give rise to other crimes and illegal acts, including fraud, money laundering, kidnapping, unlawful detention, human trafficking, illegal border crossing and so on,"

"Since the beginning of this year, in response to the growing trend of individuals involved in online gambling, telecom fraud, and related criminal grey and black industries relocating from other countries to Sri Lanka, China and Sri Lanka have intensified their joint law enforcement efforts,"

"The Chinese Embassy has strengthened communication and coordination with Sri Lanka relevant ministries and departments, including Foreign Affairs, Finance, and Public Security, while the law enforcement agencies of the two countries have continued to deepen practical cooperation.

"A number of Chinese nationals involved in fraud-related crimes have been handed over to the Chinese side, producing a strong deterrent effect. Chinese public security authorities are making every effort to advance the investigation and handling of the relevant cases." (Colombo/Oct16/2026)